Business thinkers often believe that the key to sustainable competitive advantage is finding a unique strategic niche, rather than operational efficiency. The latter is considered to be easily replicable and not worth including in high level strategy discussions. But as demonstrated in research conducted by Harvard Business Review, companies with operational excellence enjoy 25 percent higher growth.

What is Operational Efficiency, anyway ? Simply put,  it is a measure of good resource allocation. 

By looking at the ratio between an output gained from the business and an input to run a business operation, you can understand how efficient a firms operations are.

Inputs would typically be financial expenditure, people hired and time/effort spent. Outputs would typically be revenue, new customers, customer loyalty, market differentiation, production, innovation, quality, speed & agility.

So how do you go about enhancing the efficiency of your firm's operations? We like to emphasize the role of people, processes and technology

People

Almost any firm relies on its people and their skills to get work done. It's a culture that drives productivity. Improving your corporate culture will not only help in building team relationships but also in developing trust amongst the employees. Follow these steps to get the most out of your workforce and enhance operational efficiency.

1. Cooperation, not competition: If your employees are competing with each other at every step, it lowers information sharing, trust and mutual assistance. A healthy amount of competition is necessary for employees to remain motivated. However, it must not hinder collaboration towards common goals.

2. Communicate effectively and often: Communication is key to a high performance culture. Managers must constantly clarify and enforce values, reward good behaviour and results, and offer constructive feedback often. Do this so that your employees know when they're on the right track, and aren't losing sight of the organizational goals. Of importance is also listening to grievances and addressing them adequately.

3. Upskill Employees: Give your employees a chance to learn new tools, techniques and processes. By doing so, they will be able to deliver greater output and feel enthusiastic about working at your organization. Your workforce should have the opportunity to learn about multiple disciplines, thus improving their understanding of each others' work. This allows them to fill in for one another when emergencies arise and improves cross functional collaboration as well.

4. Emphasize productivity: In order to keep the prime focus on productivity, demonstrate five key metrics as common grounds for evaluation. By doing so, you can involve the employees in a feedback loop, thus making them target higher goals. Additionally, by rewarding top performers you will be able to add a disincentive for following unproductive habits. 

5. Don't be Prescriptive: Sensitize your employees towards the principles and values behind rules and regulations. Rather than blindly following procedure, help them understand the importance of rules to not just the organization's functioning, but to their own welfare as well.

Processes

The right processes allow your organization to function like a well-oiled machine.

• Standardize the operational process so that there is clarity amongst the team members.
• Define roles and responsibilities of each employee in clear and concise manner
• Remove bias from performance reviews and decision making by incorporating multiple inputs
• Identify and monitor key performance indicators (KPIs) for your firm's operations. These may be Lead to delivery time(E-commerce), social media shares( Advertising and Publishing) or Percentage of Customer Churn.
• Conduct regular audits of your business processes to identify roadblocks and solve issues
• Appoint defined POCs (Points of Contact) for communication between different functions, such as engineering and marketing.

Technology

Technology's power lies in its potential to multiply human effort. By working with the right tech, your employees can accomplish much more, much faster. And this will contribute to operational efficiency.

Conduct a technology review to assess the efficiency of your system. Familiarize yourself with what offerings are available in the marketplace and decide if an upgrade is necessary.

1. Automation: Look for ways to substitute human effort with machines. Automation will allow your workforce to concentrate on tasks that require more skill and creativity, by taking care of the mundane. Through automation, you can obtain much more data than would be possible with labour intensive processes. You can also ensure greater conformity to desired results and output. A machine can perform the same task a thousand times with no variation.

2. Using Cloud Infrastructure : By operating using cloud infrastructure, you'll be able to create transparency and easy access to information for all team members. Cloud will allow you to visualize your entire value chain, seeing where bottlenecks occur. Communication between nodes becomes much quicker as well.

3. Create an Integrated Client Profile: Seamlessly integrating customer data within the CRM system would enable anyone hosting any interaction with the client to access comprehensive information about the customer, including previous communications.

4. Task Management System: Using Task Management software will allow you to track task progress, delegate work to team members, set deadlines and adjust work schedules. Your team can easily share files, ideas, and feedback to collaborate over tasks and get things done quickly. In addition, you will be able to prioritize important tasks.

Improving operational efficiency within your organization does more than just impact your bottom line. It supports your overall organizational health and empowers your team to do their best work—which helps your organization grow from the inside out.